Economic Developments in India
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This document is downloaded from DR‑NTU (https://dr.ntu.edu.sg) Nanyang Technological University, Singapore. Economic developments in India Majumder, Shyamal 1988 Majumder, S. (1988). Economic developments in India. In Economic perspectives of SAARC : Dacca, Bangladesh, 19‑24 November 1988. Singapore: Asian Mass Communication Research and Information Centre. https://hdl.handle.net/10356/102312 Downloaded on 25 Sep 2021 21:46:55 SGT ATTENTION: The Singapore Copyright Act applies to the use of this document. Nanyang Technological University Library Economic Developments In India By Shyamal Majumder Paper No.6 v >* Ananda Bazar Patrika Limited 6 Prafulla Sarkar Street Calcutta 700001 Phone 274880 & 278000 Gram Anandabazar Telex 0215468 & 0215469 ANBZ IN * 13 November 1988 To Mr Achal Mehra, Senior ProgrammATTENTION:e T heSpecialist Singapore Copyrigh,t Act applies to the use of this document. Nanyang Technological University Library Asian Mass* Communications Research ov and Information Centre, 39,Newton Road, Singapore 1130, Republic of Singapore Dear Mr Mehra, Sub:Background report on economic developments in India I thankyou for inciting me to participate in the Conference on Economic Perspectives of SAARC in Dhaka from November 19-24,1988. A background report on the economic developments in my country is attached,I hope that you have already received my confirmation of participation at the conference. I am looking forward to a response from you. Yours sincerely. (SHYAMAL MAJUMDER) SeniorSub Editor, Business Standard 82 Ananda Bazar Patrika Limited Ananda Bazar Group of Publications: Anandabazar Palrika Business Standard The Telegraph Desh Sunday SportSHortd Ravivar Anandalok Anandamela BusinessWorld Sananda India, which began its tryst with destiny at the stroke of midnight on August 15, 1947, has made rapid stricks indeed. The stretegy accepted and adopted for the development of the Indian economy is the strategy of balanced growth and comprehensivATTENTeIO Nplanning: The Singapore .Co pyrAigh t readinAct applies tgo theo ufse othf thies doFivcumeent. Nxeaanyanrg TeFlanchnologsic al University Library Suggests that the strategy outlined in India has emphr.-sised balanced and simultaneous development all over the economy. However, this assumption of the planners did not cone out to be true. This implies that after broadly laying down sectoral priorities, careful assigning of priorities within each sector was not taken up seriously. The government has, however, woken up to the tasts and has adopted sever 1 measures to overcome the shortcomings. Firstly agriculture. In order to reduce the vulnerabi lity of agriculture to adverse weather conditons, a long time strategy has been evolved. The most important element.of the strategy is to rnavinise the area under assured irrigation. Flan allocation for major and medium irrigation projects is being augmented. Despite emphasis, on assured irrigation, however, the na.ior portion of cropoed area will continue to depend on rainfed agriculture at least till the end of this ce <tury. Accorflliifly, Contd F.2. • • p • • the full exploitation of groundwater in high rainfall areas like the Gangetic region is being empha.• i: od to achieve increa ses in gross acreage through multiple cropping. A 'coarse grain policy' i-ATsTE NalsTIONo: T hbeine Singapgor e workeCopyrightd Ac t aoupplties tfoo thre u srainfee of this docdum eareant. Nanysan gwhic Technohlog icwilal Univle rsity Library integrate production plans with pricing, storage and procurement of coarse grains, while a special 11 &. I) thrust is being given to oilseed production under a technology Mission set up for this purpose. r A third dimension of the strategy is to optimise water use in dryland agriculture by methods of water management which will maximise the area and output per unit of water. Henceforth, the thrust of agricultural research will also be redirected to support the development of rainfed a.id dryland agriculture. Afforestation programmes are being stepped up and integrated vith programmes of irrigation and water management. Implicit in this approach is the central role: of regional factors in agricultural planning. Separate strategies are being worked out for each distinct agroclimatic region to suit the require ments of agricultural development specific to that region. To maintain the momentum of economic growth, the planning Commission has accepted an annual growth r^te of 6 per cent for the eighth five year plan (1990-31 to 1994 to 93), despite loud procla- inations in favour of higher targets. Even a 6 per cent annual growth ^ Oil lid. • Jf. 2 • will be difficult to achieve but the rate lies within, or perhaps right on, the feasibility frontier. And if a 6 percent target finally ends with an achievement of 5.5 per cent per year, that ATTENTION: The Singapore Copyright Act applies to the use of this document. Nanyang Technological University Library also will be a creditvcrthy record. A steady growth at 6 per cent per year will mean a gross domestic product rising by 33.6 per cent in five yc^r, which is considerably above the 27.6 per cent increase resulting from a 5 per cent annual growth. There will of course be year-to-year oscillations around the target rate, but what is desired is a series of annual growth rates th&t are arithmetically equivalent to a compound growth rate of 6 per cent. If the population growth rate during the period can be kept below KXK 2.2 per cent year,the scope for imDroving the income, distribution will be fairly large. The government has also started levying surcharges on personal income tax, corporate income tax, wealth tax and customs duty. Several external assistance initiatives have been taken to mobilise and accelerate the dislbursal of external capital. The outlay on successive central plans have also been stepped up to maintain the priority for development. In the industrial sector, several changes are being introduced to e.isure thct competitive pressures bring in cost- efficiency. The important reforr.-is in the area of industrial Contd.....P.4. • • A • • policy in the recent past have emphasised relaxing licensing constraints on entry in priority sectors, growth (capacity re - endorsement), flexibility to respond to changing demand condi ATTENTION: The Singapore Copyright Act applies to the use of this document. Nanyang Technological University Library tions (broad-banding) and cost efficiency (e.g. prescribing minimum scales of product!on in a number of commodities). The impact of these policy initiatives is to some extent, reflected in acceleration of industrial growth in recent years. i Apart from regulating the overall level of credit in the economy, the objective of credit policy is to promote an effective lise of credit and also to encourage the spectrum of borrowers covered by bank credit keeping in view the national priorities laid down from time toliLaie. The governments' growing budget deficit has raised several eyebrows. The government is the "largest player" in the economy; its "economic performance" is, therefore, crucial to the country's economic well-being. Perhaps more important than the growing budget deficit is the use of the capital account surplus for purposes of revenue expenditure. Hence there is a strong case for curtailing non-plan revenue expenditure or alter natively, raising taxes. It is not without reason that ilr. Michel Comdessus expressed his apprehensions abo.it the budget deficit. Even the 3. 3 I annual report for the year ended June, 1988, called for a Contd F.5. • • *s • * cautions monetary stand to check inflation which is running at 10 per cent annually. It is not known if the HE I policy of "backdoor" devoluation will improve the current account balance. The following is an item-wise discuss*ion on different e c on o:riic sect or s. ATTENTION: The Singapore Copyright Act applies to the use of this document. Nanyang Technological University Library RURAL Rural India is the backbone of the country's economy as over 70 per cent of population lives in the rural areas. Despite concerted industrialisatioATTENTIONn: T hei Snin gathpore C olaspyrightt Actwt appoli esdecades to the use of th,i s dagriculturocument. Nanyang eTe choccupienological Univser sitay Libplacrary e of pride. The country's foodgrains production is expected to touch 170 million tonnes in the current year. Commercial crops are also expected to do exceptionally well with cotton output projected at 110 lakh bales and sugar 10 million tonnes. Recent trends in edible oil production also reflect the large kharif crop expected this year. This reflects the resilience shown by Indian agriculture luring severe droughts in three consecutive years. Cooperative credit to farmers during this year's rabi season registered an unprecedented increase. The bulk of it was handed over to ;he growers in kind, in the form of fertiliser. The pancity of wheat seed was made good by drawing some quantities of grains from food stocks ind using them as seeds. These were supplied to the states at a huge rub sidy. The planning commission has decided to implement a project, hich alms at more diversified agriculture, covering, besides crop usbandry, poultry farming, dairying and agro-processing. Agriculture is also the main support for India's transport ystem, since the railways and roadways secure bulk of their business rom the movement of agricultural goods..Finances of the government, specially the state governments depend, to a large extent, upon the rosperity of agriculture. RURAL DEVELOPMENT SCHEMES The government has Implemented several rural development schemes with the main objective of alleviating poverty. The schemes ii lude IntegrateATTENTIOdN: ThRurae Singaplo re DevelopmenCopyright Act appliest toProTranime the use of this docu, meNationant. Nanyang Tle chnRuraologicall U nivEmploymenersity Library t Programme, Rural Landless Employment Guarantee programme, Training of Rural Youth for Self-Employment etc. The Schemes have however failed to be much of a success due to several factors. There is widespread under-employment with regional variations in the levels of development in the country.